Predictions from as early as February were that the South African motor industry was in for a tough year – a third one in a row.
This as a weak economy with poor growth prospects, as well as rising interest rates, led to a drop in demand for new vehicles.
Today we report that General Motors SA, one of Nelson Mandela Bay’s biggest employers, is on the brink of shedding jobs.
The company confirms that it has been hit by economic weakness in sub-Saharan Africa markets, which has led to a decline in new vehicle sales in these markets, including South Africa.
“As a result we have no other option but to revise our production schedule,” company spokeswoman Gishma Johnson said on Friday.
The situation is highly concerning, particularly because it is not isolated.
It tells a broader story of the tough times faced by the industry.
Latest figures from industry body Naamsa show a 14.4% decline in the new car market compared to September last year.
The motor sector is a crucial one. It is not only an anchor industry for the Eastern Cape, but a significant roleplayer in our national economy.
It contributes at least 6% to the country’s GDP and accounts for almost 12% of our country’s manufacturing exports.
Its financial pressures are part of a larger economic crisis across sectors of our economy.
Last week, Statistics SA revealed that 67 000 jobs were lost in the formal economy in the second quarter.
This is up from 15 000 jobs lost in the first quarter.
These are not just numbers. Behind them are people whose families – in many respects – depend on their income to survive.
While GMSA would not confirm how many people would be given severance packages, should that decision be made, the union estimates that at least 200 jobs would be affected.
If this is accurate, the knock-on effect would be significant.
It would mean a change in income for 200 families in this city at a time when our economy is most vulnerable.
This is why the negotiations between all parties must consider all these factors and find alternatives to limit the potential devastating economic ramifications.